HC Deb 18 December 1974 vol 883 cc1568-70
25. Mr. Buchanan

asked the Secretary of State for Foreign and Commonwealth Affairs if he will take account of the deficit in trade between the United Kingdom and the EEC partners, as stated by the Secretary of State for Trade on 18th November, in his renegotiation of the terms of United Kingdom membership.

Mr. James Callaghan

The country's trade deficit is a matter for serious concern wherever it arises. Since 1971 there has been a general deterioration in Britain's non-oil trade gap with a number of important trading partners and all these factors will be taken into account.

Mr. Buchanan

Does my right hon. Friend find that this deficit weakens his hand in renegotiation with the EEC? Is the deficit unique among our partners in the EEC? How does it compare with our increasing deficits with other countries?

Mr. Callaghan

I do not find that the deficit weakens our negotiating hand. Other countries have a large deficit too, although Germany is in substantial surplus. On the second part of the question I have to report a genuine deterioration. Our non-oil trade gap with the EEC has increased fivefold between 1971 and 1973, with EFTA it has increased threefold, with the Commonwealth it has increased thirteenfold and with the United States it has increased by 17 times.

Mr. Scott-Hopkins

Does the Foreign Secretary agree that membership of the Community has greatly benefited our trade and that because of the lowering of trade barriers between Britain and the EEC we have obviously increased trade with the Community, much to our benefit?

Mr. Callaghan

Trade has increased and so has our deficit. Whichever side hon. Members stand on in this controversy, they must recognise that it is too soon to say whether membership has benefited or worsened our position on the balance of payments. One has only to look at the figures that I have set out before me in connection with our deficit with other countries to see that it is very difficult to draw any conclusion. If we are to have an argument about this, let us at least get it on to a sensible basis.

Mr. James Lamond

Is not part of the deficit due to the unfortunate importing from Mediterranean associate members of cheap cotton yarn, which by mistake, I presume, has been labelled as a raw material? The importation of this yarn is having a devastating effect on the cotton spinning industry in the North West, so much so that some manufacturers are prophesying the death of the industry in this country in the early part of 1975.

Mr. Callaghan

The Commission is meeting today, I understand, to consider this matter, which is a serious issue for Lancashire. The position of the textile industry has taken up the time of a number of meetings of the Council of Foreign Ministers, but it would not be right to ascribe any substantial proportion of the total deficit with the EEC to that particular subject.

Mr. Marten

Assuming that a parliamentary answer is a sensible basis for this discussion, is the Foreign Secretary aware of an answer which I received last Thursday which showed that 96 per cent. of our non-oil trade deficit was attributable to the EEC?

Mr. Callaghan

I have the actual figures here and if I can find them quickly I shall give them. The argument depends upon the total figure. I have been trying to make a fair appraisal of it. I must tell the hon. Member for Banbury (Mr. Marten), who is a fair controversialist on these issues, that I would defy anybody to draw any particular deduction about what is likely to happen in terms of our membership of the EEC from what has taken place since 1st January 1973. That simply is not possible. I have pages of statistics here and I have done my best to find a thread through them in order to try to find an answer, but there is not a clear answer.

Mr. Blaker

Is the right hon. Gentleman aware that the proposal by the Secretary of State for Trade appears to be that we should have a free trade area instead of membership of the EEC? Will the Foreign Secretary explain, or ask his right hon. Friend to explain, how that would improve our trading deficit compared with membership of the EEC?

Mr. Callaghan

I do not know that my right hon. Friend has indicated that it would improve our deficit. He has argued that it would be better for Europe as a whole if there were a free trade area rather than the EEC with the Commission operating, and that is an entirely different matter. I hesitate to draw a deduction having advised hon. Members not to do so, but the only deduction one can draw is that membership of the EEC has probably done very little to alter the balance one way or the other. We have to set against a deficit such points as the increasing activity which has taken place in this country and the fact that we are buying more food from the EEC and less from elsewhere. There are many different factors that operate both ways on this and it is simply not possible yet to assess the impact of the EEC on our trading position.